Insurance costs for small trucking companies are climbing so fast that many operators with just one to 10 trucks are struggling to stay afloat. Karen Eernisse, a national commercial trucking insurance agent with Western Truck Insurance, says these rising expenses are pushing fleets to the brink financially.
Two decades ago, the cost to insure one truck for auto liability was about $6,000. Now, that same coverage starts between $18,000 and $22,000 per truck. Meanwhile, fuel prices have increased tenfold. This means small trucking businesses, which once earned around $200,000 a year, are now making just $70,000 to $80,000. “It’s not sustainable,” Eernisse explains, adding that some truckers could earn that much managing a fast-food restaurant instead.
Larger fleets have more room to negotiate insurance prices because they bring in bigger premiums. But small fleets lack that bargaining power. One major accident could wipe out profits for many small operators at once. Eernisse says that with only a handful of trucks, a single $1 million claim can disrupt the whole group’s finances.
One of the main reasons behind these rising premiums is the increase in so-called “nuclear verdicts.” These are huge court payouts that scare insurance companies and cause them to raise prices to cover worst-case scenarios. With small fleets, insurers can face loss ratios up to 200%, meaning they lose money quickly in the long run.
The insurance situation in California is particularly harsh. Eernisse calls it the “worst state” for small trucking insurance. Many insurance companies have stopped offering new policies there, except for a few like Progressive and Berkshire Hathaway’s NICO.
Part of the problem is how insurance risk is measured for small truckers. The math models don’t work well when the group is tiny because just one big loss can throw off the numbers for everyone else. This makes insurers hesitant to write policies for small fleets.
Some new programs are trying to use technology like telematics and AI to better understand risk. These tools track how a driver behaves, where they travel, and what cargo they carry. Companies like Nirvana use this real-time data to price insurance more accurately. However, there’s still a gap between what this tech shows and what insurers trust. Eernisse says actuarial data, which is based on long-term statistics, remains the gold standard.
There are also concerns about driver privacy when using devices like inward-facing cameras. Since many truckers live in their cabs, some are uncomfortable with constant monitoring. Still, some insurers, such as Century Insurance, focus on combining safety training with insurance to support truckers more effectively.
Beyond insurance coverage, there is a serious lack of basic health and life protection for truck drivers. Eernisse envisions affordable packages that cover disability, life insurance, cancer treatments, and major medical costs. Many drivers are the sole earners for their families, yet options for extra protection in case of accidents or illness are scarce and costly.
Adding to the struggles are tougher federal compliance rules. Processes that used to be simple, like updating safety reports, have become confusing and time-consuming. The new online portals have long wait times and complicated steps. As a result, many drivers now turn to third-party services to handle these tasks, though these solutions aren’t perfect.
Insurance fraud and outdated certificate validations also pose risks. Services that check insurance certificates often use data that’s weeks old, missing real-time changes or uninsurable trucks. Eernisse advises getting certificates directly from insurance companies and verifying vehicle IDs to avoid surprises.
For small trucking businesses, the road ahead looks tough. Insurance companies are backing away, new technology hasn’t fully gained insurers’ confidence, and government processes are more demanding. Eernisse sums it up simply: the financial reality is harsh, and truckers aren’t getting the support and coverage they desperately need.